Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s

NBER Working Paper No. w8220

Number of pages: 47Posted: 08 Apr 2001Last Revised: 26 Dec 2001

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Date Written: April 2001

Abstract

This paper describes and considers explanations for changes in corporate governance and merger activity in the United States since 1980. Corporate governance in the 1980s was dominated by intense merger activity distinguished by the prevalence of leveraged buyouts (LBOs) and hostility. After a brief decline in the early 1990s, substantial merger activity resumed in the second half of the decade, while LBOs and hostility did not. Instead, internal corporate governance mechanisms appear to have played a larger role in the 1990s. We conclude by considering whether these changes and the movement toward shareholder value are likely to be permanent.

Holmström, Bengt R. and Kaplan, Steven Neil, Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s (April 2001). NBER Working Paper No. w8220. Available at SSRN: https://ssrn.com/abstract=266190

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